If inherent risk is assessed at the maximum, control risk as moderate and analytical procedures risk at moderate, the acceptable level of detection risk for tests of details is low.

Question

Quizplus · Accepted Answer

When inherent risk is high and both control risk and analytical procedures risk are assessed at moderate levels, the auditor must compensate by setting a lower acceptable level of detection risk for tests of details to reduce the overall audit risk to an acceptable level. This means performing more extensive or detailed audit procedures to ensure that material misstatements are detected.

If Inherent Risk Is Assessed at the Maximum, Control Risk